How to Make Money Dropshipping: 8 Proven Steps

Getting started with dropshipping to make money online isn’t easy, but it’s a great first step. In dropshipping, there’s no inventory to hold or upfront payments to make. It’s possible to make a long-term income if you put your heart and soul into it.

For those interested in earning through dropshipping, here’s a complete dropshipping tutorial. There are some steps you have to take right away, and others that are advisable for a smoother ride. You’ll save time and avoid headaches if you deal with these upfront.

After reading this guide, if you’re still confused, check out some dropshipping courses.

How Does the Dropshipping Business Model Work?

The dropshipping business model is a retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third-party supplier who then ships it directly to the customer. This model allows the retailer to focus on marketing and customer service without the need to manage inventory or handle shipping logistics.

Here’s how it works:

  1. A customer visits the online store and places an order for a product.
  2. The retailer forwards the order details to a third-party supplier such as Alibaba or AliExpress. 
  3. The supplier packages and ships the product directly to the customer. The retailer does not handle the product physically.
  4. The customer receives the product as if it were shipped directly from the retailer.

If you’re using Shopify, DSers simplifies dropshipping. It offers a marketplace through AliExpress that you can easily import into your store with a single click.

When a customer makes a purchase, the order is automatically processed, and your only job is to review the details and click “Order.” The supplier then takes care of shipping directly to the customer.

How to Make Money from Home with Dropshipping

  1. Choose a dropshipping business idea
  2. Do competitive research 
  3. Choose a dropshipping supplier
  4. Set up your eCommerce store
  5. Decide on a business structure
  6. Organize your finances
  7. Promote your dropshipping store
  8. Assess and Enhance Your Offering

1. Choose a dropshipping business idea

Choosing the right business idea is crucial for the success of your dropshipping venture. To help you get started, we’ve compiled a list of 130+ dropshipping product ideas.

To get better results, target niche and trending products instead of competing with large, established companies. Niche products are easier to sell because they appeal to passionate customers.

You can begin a dropshipping business without any initial capital by selling items in categories like fitness, fashion, beauty, electronics, phone accessories, or yoga.

Here are some examples of niche dropshipping stores:

  • Yoga mats for yogis
  • Pushup boards for fitness enthusiasts
  • Seat cushions for office workers
  • 3D moon lamps for home decoration

To test your dropshipping business ideas, consider these methods:

  • Use Google Trends: This tool helps you gauge if a niche is gaining or losing popularity, though it’s not the complete picture.
  • Use Ubersuggest’s keyword tool: Assess search volume and competition for keywords to understand niche popularity and generate new business ideas.
  • Explore popular niche websites: Browse websites in your chosen niche to stay updated on trends. For instance, a fashion site might showcase current trends, and best-selling products indicate high demand.
  • Check product order volume: Examine how many orders a product receives to gauge its popularity and potential as a hot seller. Remember that lower order numbers might mean a new product gaining traction.

2. Do competitive research

If you want to succeed at dropshipping, you need to understand your competitors. Find out what other dropshipping companies are doing in your market, including some major players like Walmart, eBay, and Amazon.

To get stared, you can do a basic search using relevant keywords like “iPhone cases.” The top ten results will reveal your main competitors and how they promote their products. For specific keyword data in your target country, use tools like Ahrefs or SEMRush.

Once you have identified your competitors, analyze their websites and product offerings to understand their strengths and weaknesses.

Here’re some tools you might use:

  • SimilarWeb, Alexa, Ahrefs: Use these tools to analyze competitors’ websites, traffic sources, keywords, and backlinks.
  • Shopify Spy Extensions: Tools like Koala Inspector and Ecomhunt can provide insights into competitors’ Shopify stores, including traffic analytics and app usage.

Apart from that, you can also check their Facebook ads to analyze how they engage with customers, their visual design and level of engagement. 

Since email marketing is also a good way to promote your dropshipping products, you may subscribe to your competitors’ email lists to observe how they market their products and learn about their deals.

When analyzing the websites of your top competitors, pay attention to factors like pricing, marketing strategies, product descriptions, and their overall reputation. You may organize your research in a spreadsheet for reference when making decisions for your store. 

3. Choose a dropshipping supplier

If you’re starting a dropshipping business, finding a good supplier is key to your success. These suppliers handle shipping products to your customers.

One effective way to discover potential suppliers is through e-commerce platforms like Shopify. Shopify offers a marketplace called DSers that simplifies finding products to sell online. It’s free, and with a single click, you can add products from various categories like electronics, fashion, and toys to your store.

DSers sources its products from AliExpress. The product page on DSers provides crucial information like product quality, shipping times, and tips for evaluating suppliers. You can also access reviews and popular products on AliExpress by clicking the supplier’s link.

If your supplier is in China, consider selling products from distributors offering ePacket shipping. ePacket is a cost-effective and speedy shipping option for sending items from China to places like the United States, the United Kingdom, and Canada. It allows you to deliver products to your customers within two weeks, with shipping costs of just a few dollars.

Ready to start your dropshipping business? Take a look at our list of recommended dropshipping suppliers.

4. Set up your eCommerce store

Your next step is to choose an eCommerce platform, such as Shopify, to start a dropshipping business. Here you’ll send traffic, sell products, and process payments. 

The Shopify platform makes it easy to build and launch eCommerce websites, including registering domain names and adding marketing plug-ins. It’s a complete commerce platform for selling in multiple places (including online), accepting multiple currencies, and managing products easily. 

Neither a designer nor a developer is required to use Shopify. Store builders and Shopify themes make it easy to customize your store’s appearance.

Learn more: How to Start a Shopify Store

5. Decide on a business structure

Starting a business can be exciting, but it’s crucial to pick the right structure to safeguard your assets and boost profits. There are three common business structures: sole proprietorship, limited liability company (LLC), and C corporation.

To determine the best choice for your business, consider factors like your business plan, tax advantages, level of formality, funding sources, and business objectives.

For many small businesses and dropshippers, the decision often boils down to choosing between a sole proprietorship and an LLC. A C corporation, on the other hand, is typically better suited for larger businesses with greater complexity.

Regardless of your choice, it’s vital to grasp the pros and cons of each option to make an informed decision that aligns with your business goals.

Below is a brief overview of these three business structures:

  1. Sole Proprietorship: It’s the easiest to set up with minimal paperwork. However, your personal assets are at risk if your business faces legal issues.

  2. LLC (Limited Liability Company): Provides better protection for your personal assets but requires more paperwork and fees.

  3. C Corporation: Offers the highest liability protection but is the most expensive to establish and can be subject to double taxation.

If you’re outside the U.S. and want to create an LLC or C Corporation in the U.S., follow these steps:

  • Choose your business structure and state.
  • Get a registered agent and an Employer Identification Number (EIN).
  • Open a U.S. business bank account.
  • Consider consulting a professional to stay compliant.

For a U.S. dropshipping business, don’t forget to apply for an EIN, like a social security number for your business. You’ll need it for taxes, bank accounts, and working with suppliers. Visit the IRS website, download form SS-4, fill it out, and consider seeking help from a consultant or lawyer if needed.

6. Organize your finances

When starting a dropshipping business, you need to carefully plan and think about your finances. Several factors will affect how much money you’ll need:

  • The size of your business
  • The cost of the products you’re selling
  • Where your supplier or manufacturer is located
  • The software and tools you use for your dropshipping website
  • Other expenses you expect

To get a realistic idea of your finances, consider all these factors and estimate your costs for at least a year.

It’s essential to keep your personal and business finances separate right from the beginning. In other words, you need to open these new accounts specifically for your business:

  • Business Checking Account: This is where all your business money goes in and out. It makes it easier to track your expenses and income.
  • PayPal Account: Get a business account if you’re using PayPal for your business. Keep your business finances separate from personal ones.
  • Business Debit/Credit Card: Avoid using your personal card for business expenses. Get a separate business card for your business expenses. Good options include Capital One, American Express, and Fidelity Visa for dropshipping businesses.

Taxes for items sold through dropshipping can get complicated. It depends on where you, your customers, and your product source are located, as well as sales tax rules. Here’s a quick summary:

  • If you have a presence (nexus) in the same state as the sale, you usually have to collect sales tax unless it’s tax-exempt.
  • If neither you nor your supplier have nexus in the state of the sale, the customer might be responsible for the tax unless it’s tax-exempt.
  • Sometimes, if you don’t have nexus but your supplier does, they may have to collect the sales tax. This varies by state, so check your state’s tax laws.

Renewing business licenses for dropshipping can be different depending on local laws, especially if you run your business from home. Check your local regulations to see if there are any specific requirements you need to meet.

7. Promote your dropshipping store

It’s time to talk about marketing your new store now that you know how to start a dropshipping business. As you build your dropshipping business plan, you may want to put extra effort into your marketing and advertising efforts. 

Dropshipping automates so much that you can spend your time focusing on marketing and promoting your business.

1. Paid ads (Facebook and Google)

The average cost per click for a Facebook ad is about 97 cents, which isn’t bad for someone who is new to advertising on Facebook. In addition to being scalable, Facebook ads can perform well and play to people’s desire to impulse buy.

Shoppers are more likely to make purchases when you target long-tail keywords with Google Shopping Ads. It’s typically more expensive to run Google ads, but it may be worth it to test it out.

In addition, you can consider TikTok ads. Globally, TikTok has over 1 billion monthly active users. It is a great social media site for dropshippers and marketers to establish credibility and increase conversions with their target market.

2. Influencer marketing

Dropshippers often have limited marketing budgets. The benefits of influencer marketing are cost-effective because people trust them more than traditional advertising because they tend to trust influencers. Negotiate an affiliate fee rather than a flat rate with the influencer if you choose this route. Since they will be making money off of each sale, and you will be saving money, it’s a win-win situation. 

3. Content marketing

Create a content marketing plan for your dropshipping business if you want to build a long-term stream of traffic for your store. You can start a blog around your dropshipping niche and create content that entertains and educates your target audience. To get the word out about your brand, you could also start a YouTube channel, make infographics, or create a podcast.

4. Communities

Join groups of passionate people in your niche. On Reddit, Facebook groups, or online forums, you can start conversations with potential customers. Just don’t be too salesy. Build relationships with potential customers so they trust you and want to buy from you.

5. Mobile marketing

In mobile marketing, companies connect with their customers through their mobile devices. For example, you can set up a VIP text club and visitors to your site can sign up to receive exclusive offers. Shoppers can get customer support through Messenger Live Chat. With a mobile marketing platform like ManyChat, you can create automated lead generation, retention, and abandonment campaigns to increase sales for your dropshipping business. 

Keeping an eye on which channels are working and which are not is key to running a successful online business, especially if you are investing money in those channels. You can always adjust your marketing strategy as your business grows and improves, so you can reduce costs and maximize sales.

8. Assess and enhance your offering

As you continue to market and operate your dropshipping business, it’s crucial to monitor your progress and make improvements. Utilize Shopify analytics to gain insights into your store’s performance by addressing these key questions:

  • Sales: Identify your best-performing sales channels, allocate your advertising budget wisely, pinpoint your top-selling products, and track customer retention.

  • Shopper Behavior: Analyze whether customers prefer mobile or desktop shopping, and determine which device yields the highest conversion rates.

  • Profit Margins: Identify products or SKUs with the most favorable profit margins, and track the trends in your monthly sales and gross profit.

Utilize tools like Google Analytics and Search Console to monitor your search traffic and enhance your website’s SEO over time. Additionally, if you employ third-party apps for social media or messenger marketing, regularly review their reports.

For a dropshipping e-commerce store, establish a data-driven analytics system. Consistently measure your store’s performance using clear Key Performance Indicators (KPIs). This proactive approach will empower you to make informed business decisions and propel your small business to greater heights.


Can You Buy a Dropshipping Business?

Yes, you can purchase a ready-made dropshipping business on Shopify’s online marketplace, Exchange. They offer over 10,000 pre-made dropshipping stores that match your interests and budget. Each listing includes transparent traffic and revenue statistics directly from Shopify.

What is the biggest reason for dropshipping failure?

The most common reason for dropshipping failure is neglecting to provide valuable products to customers. Focusing on low-quality or irrelevant products often leads to declining sales, causing many dropshipping entrepreneurs to quit due to lack of profit.

Is dropshipping suitable for new entrepreneurs?

Absolutely. Dropshipping is an excellent choice for beginners. It allows you to start a business without a large upfront investment in inventory. It’s ideal for those with a talent for sales and marketing, offering an accessible entry into entrepreneurship.

How long does it take to make money with dropshipping?

The timeline for profitability in dropshipping varies, given the unpredictable nature of online businesses. Typically, it takes around 3 months to start seeing some profits.

However, individual results can differ based on niche choice, marketing efforts, and market conditions. Success in dropshipping requires patience and consistent effort.

Final Words

Dropshipping is a cost-effective and straightforward way to make money. While some may debate dropshipping’s profitability, it’s still a viable option for those who understand the market. Many new dropshipping businesses succeed with clever marketing.

Like any business, success in dropshipping depends on meeting customer needs, even when dealing with shipping costs. With the right approach, you can build a profitable dropshipping venture.

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